The world's biggest retailer, Walmart, announced on Monday that it is to replace its president and chief executive, Mike Duke, who is stepping aside after a year in which the company has struggled with sluggish sales and labour disputes.

Doug McMillon, currently CEO of Walmart's international division, will replace Duke as president and CEO of Walmart Stores on 31 January. Duke relinquishes the reins five years in charge, although he will stay on as chairman of the company's executive committee.

Duke has overseen a disappointing period for Walmart. The company's shares have underperformed, and it has found itself criticised over working conditions. Activists are planning a series of strikes on Black Friday, seen as one of the most important days in the US retail calendar.

McMillon, 47, is a veteran of the company. He worked as a "summer associate" for Walmart in 1984 before returning in 1990, according to his profile on Walmart’s corporate website. He was president and chief executive of Sam's Club, a subsidiary of Walmart, from 2006 to 2009.

“The opportunity to lead Walmart is a great privilege,” McMillon said in a statement. “Our company has a rich history of delivering value to customers across the globe and, as their needs grow and change, we will be there to serve them. Our management team is talented and experienced, and our strategy gives me confidence that our future is bright."

Walmart's share price has risen by just over half, during Duke's tenure as chief executive. The S&P 500 has more than doubled over the same period.

Duke, 63, will continue as chairman of the executive committee of the board and stay on as an adviser to McMillon for a year. Duke will be paid $1.1m for the year to January 31 2015, Walmart said in a regulatory filing. Walmart shares were trading at $79.96 before the bell.

Walmart attempted to put a positive gloss on Monday's announcement. “This leadership change comes at a time of strength and growth at Walmart,” said Rob Walton, chairman of the board of directors, in a statement. “The company has the right strategy to serve the changing customer around the world, and Doug has been actively involved in this process. The company has a strong management team to execute that strategy.”

Once a retailing powerhouse, Walmart has struggled significantly this year. Its same-store sales – a measure of profitability – fell in each quarter, and MKM Partners, a Wall Street research firm, expects more of the same in the last three months of the year.

The company attributed the fall to several different factors, ranging from government policy changes to the struggling economy. It has also faced significant labour disputes with its employees, some of which have organised to complain about the company's low pay. Last week, a Walmart store in Ohio took up a charity collection of canned food for Thanksgiving – for its own workers.

Walmart recently launched a cut-price brand, called Price First, that will include kitchen staples like ketchup, mustard, peanut butter and macaroni and cheese. The line is designed to keep up with Walmart's grocery offerings to low-income consumers, articularly those who buy supplies with food stamps.

Patrick McKeever of MKM Partners recently noted that Walmart, which already competes with giants like Costco, BJs and Sam's Club, is now facing a new crop of rivals as it "continues to lose share to smaller-format retailers, including the dollar stores".

Walmart has also struggled with its growth in international markets, where its expenses have been outpacing sales, according to Deutsche Bank analyst Paul Trussell. It has started downsizing in India and Mexico, while closing 50 underperforming stores in Brazil and China, McKeever said in a recent note to clients.

Worker group Our Walmart has promised 1,500 protests on Black Friday. The group is calling for Walmart, which made $17bn profit in 2012, to pay employees a minimum of $25,000 a year for full-time work.

Our Walmart member Tiffany Beroid, one of more than 800,000 store workers who earn less than $25,000 a year, said:"Walmart has been heading in the wrong direction, and it's a testament to the pressure the company is feeling that they're changing leadership at this moment.

"We're happy to see Mr McMillon acknowledge the hard work of associates in his statement this morning, and we hope that this appreciation translates into improving jobs for Walmart workers. We sincerely hope that Mr McMillon will answer the country's calls for Walmart to publicly commit to paying $25,000 a year, providing full-time work and ending its illegal retaliation against its own employees."

On Monday it emerged that Walmart had donated $425,000 to state senate Republicans in New York over the past three years. The sum included a $100,000 donation in March which coincided with GOP state senators pushing for a tax credit that could have saved the company millions of dollars.